Management Course: Discussion Topic 12

Organizational Change

McGraw-Hill/Irwin

McShane/Von Glinow OB 5e

Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.

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Umpqua Bank’s

Umpqua Bank has become the largest regional community bank in the Pacific Northwest by applying effective organizational change practices

OrganizationalChange

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Lewin’s Force Field Analysis Model

• Developed by Kurt Lewin
• Driving forces
• Push organizations toward change
• External forces or leader’s vision
• Restraining forces
• Resistance to change -- employee behaviors that block the change process

Driving

Forces

Restraining

Forces

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Desired

Conditions

Current

Conditions

Before
Change

After
Change

Force Field Analysis Model

During
Change

Driving

Forces

Restraining

Forces

Driving

Forces

Restraining

Forces

Driving

Forces

Restraining

Forces

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Not Hoppy About Change

Mina Ishiwatari(front) wanted to improve Hoppy drink’s brand image, but most staff didn’t want to change. “I tried to take a new marketing approach to change the image of Hoppy . . . but no one would listen to me.” She improved Hoppy’s popularity with limited support or budget. Most employees who opposed Ishiwatari’s changes have since left the company.

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Restraining Forces (Resistance to Change)

Many forms of resistance

• e.g., complaints, absenteeism, passive noncompliance

View resistance as a resource

Symptoms of deeper problems in the change process

A form of constructive conflict -- may improve decisions in the change process

A form of voice – helps procedural justice

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Why People Resist Change

Direct costs

• Losing something of value due to change

Saving face

• Accepting change acknowledges own imperfection, past wrongdoing

Fear of the unknown

• Risk of personal loss
• Concern about being unable to adjust

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Why People Resist Change
(con’t)

Breaking routines

• Organizational unlearning is part of change process
• But past practices/habits are valued by employees due to comfort, low cognitive effort

Incongruent organizational systems

• Systems/structures reinforce status quo
• Career, reward, power, communication systems

Incongruent team dynamics

• Norms contrary to desired change

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Creating an Urgency for Change

• Inform employees about driving forces
• Most difficult when organization is doing well
• Customer-driven change
• Adverse consequences for firm
• Human element energizes employees
• Sometimes need to create urgency to change without external drivers
• Requires persuasive influence
• Use positive vision rather than threats

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Minimizing Resistance to Change

Highest priority and first strategy for change

Improves urgency to change

Reduces uncertainty (fear of unknown)

Problems -- time consuming and costly

Communication

Learning

Involvement

Stress Mgt

Coercion

Negotiation

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Minimizing Resistance to Change

Provides new knowledge/skills

Includes coaching and other forms of learning

Helps break old routines and adopt new roles

Problems -- potentially time consuming and costly

Communication

Involvement

Stress Mgt

Coercion

Negotiation

Learning

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Minimizing Resistance to Change

• Employees participate in change process
• Helps saving face and reducing fear of unknown
• Includes task forces, future search events
• Problems -- time-consuming, potential conflict

Learning

Involvement

Stress Mgt

Coercion

Negotiation

Involvement

Communication

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Minimizing Resistance to Change

When communication, learning, and involvement are not enough to minimize stress

Potential benefits

• More motivation to change
• Less fear of unknown
• Fewer direct costs

Problems -- time-consuming, expensive, doesn’t help everyone

Learning

Involvement

Coercion

Negotiation

Stress Mgt

Communication

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Minimizing Resistance to Change

• Influence by exchange -- reduces direct costs
• May be necessary when people clearly lose something and won’t otherwise support change
• Problems
• Expensive
• Gains compliance, not commitment

Learning

Involvement

Stress Mgt

Coercion

Communication

Negotiation

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Minimizing Resistance to Change

When all else fails

Assertive influence

Radical form of “unlearning”

Problems

• Reduces trust
• May create more subtle resistance
• Encourage politics to protect job

Coercion

Learning

Involvement

Communication

Stress Mgt

Negotiation

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Refreezing the Desired Conditions

“When you are leading for growth, you know you are going to disrupt comfortable routines and ask for new behavior, new priorities, new skills… Even when we want to change, and do change, we tend to relax and the rubber band snaps us back into our comfort zones.”

Ray Davis, CEO, Umpqua Bank

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Refreezing the Desired Conditions

• Realigning organizational systems and team dynamics with the desired changes
• Alter rewards to reinforce new behaviors
• Change career paths
• Revise information systems

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Change Agents

• Change agent -- anyone who possesses enough knowledge and power to guide and facilitate the change effort
• Engage in transformational leadership
• Develop the change vision
• Communicate the vision
• Act consistently with the vision
• Build commitment to the vision

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Strategic Vision & Change

• Need a vision of the desired future state
• Identifies critical success factors for change
• Minimizes employee fear of the unknown
• Clarifies role perceptions

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Diffusion of Change

• Begin change as pilot projects
• Effective diffusion considers MARS model
• Motivation – pilot project is successful, reward diffusion of pilot project
• Ability – Train employees to adopt pilot project
• Role perceptions –Translate pilot project to new situations
• Situational factors – Provide resources to implement pilot project elsewhere

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Action Research Approach

• Action orientation and research orientation
• Action – to achieve the goal of change
• Research – testing application of concepts
• Action research principles

Open systems perspective

Highly participative process

Data-driven, problem-oriented process

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Form

client-

consultant

relations

Disengage

consultant’s

services

Action Research Process

Diagnose

need for

change

Introduce

intervention

Evaluate/

stabilize

change

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BBC Takes the Appreciative Journey

To become a more creative organization, the British Broadcasting Company sponsored an appreciative inquiry process of employee consultation, called Just Imagine. “It gave me a powerful mandate for change,” said BBC’s chief executive at the time.

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Appreciative Inquiry Approach

• Frames change around positive and possible future, rather than traditional problem focus.
• Application of positive organizational behavior

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Four-D Model of Appreciative Inquiry

Designing

Engaging in dialogue about “what should be”

Dreaming

Forming ideas about “what might be”

Discovery

Discovering the best of “what is

Delivering

Developing objectives about “what will be”

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Large Group Interventions

• Future search, open space, and other interventions that involve “the whole system”
• Large group sessions
• May last a few days
• High involvement with minimal structure
• Limitations of large group interventions
• Limited opportunity to contribute
• Risk that a few people will dominate
• Focus on common ground may hide differences
• Generates high expectations about ideal future

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Parallel Learning Structure Approach

• Highly participative social structures
• Members representative across the formal hierarchy
• Sufficiently free from firm’s constraints
• Develop solutions for organizational change which are then applied back into the larger organization

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Organization

Parallel

Structure

Parallel Learning Structures

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Cross-Cultural and Ethical Concerns

• Cross-Cultural Concerns
• Linear and open conflict assumptions different from values in some cultures
• Ethical Concerns
• Privacy rights of individuals
• Management power
• Individuals’ self-esteem

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Organizations are About People

“Take away my people, but leave my factories, and soon grass will grow on the factory floors. Take away my factories, but leave my people, and soon we will have a new and better factory.”

Andrew Carnegie (1835-1919)

Source: Library of Congress